Respondents pleaded guilty to welfare fraud and were ordered by
a Pennsylvania court, as a condition of probation, to make monthly
restitution payments to petitioner county probation department for
petitioner state welfare department. Subsequently, respondents
filed a petition under Chapter 13 of the Bankruptcy Code in the
Bankruptcy Court, listing the restitution obligation as an
unsecured debt. After the probation department commenced a
probation violation proceeding in state court, alleging that
respondents had failed to comply with the restitution order,
respondents filed an adversary action in the Bankruptcy Court
seeking both a declaration that the restitution obligation was a
dischargeable debt and an injunction preventing the probation
department from undertaking any further efforts to collect on the
obligation. The Bankruptcy Court held that the obligation was an
unsecured debt dischargeable under Chapter 13. The District Court
reversed, relying on
Kelly v. Robinson, 479 U. S.
36, which held that restitution obligations are
nondischargeable in Chapter 7 proceedings because they fall within
Code § 523(a)(7)'s exception to discharge for a debt that is a
government "fine, penalty, or forfeiture . . . and is not
compensation for actual pecuniary loss." The District Court
emphasized the Court's dicta in
Kelly that Congress did
not intend to make criminal penalties "debts" under the Code. The
court also emphasized the federalism concerns that are implicated
when federal courts intrude on state criminal proceedings. The
Court of Appeals reversed.
Held: The Code's language and structure demonstrate
that restitution obligations constitute "debts" within the meaning
of § 101(11), and are therefore dischargeable under Chapter 13. Pp.
495 U. S.
557-564.
(a) Section 101(11)'s definition of "debt" as a "liability on a
claim" reveals Congress' intent that the meanings of "debt" and
"claim" be coextensive. Furthermore, § 101(4)(A)'s definition of a
"claim" as a "right to payment" broadly contemplates any
enforceable obligation of the debtor, including a restitution
order. Petitioners' reliance on
Kelly's discussion
emphasizing the special purposes of punishment and rehabilitation
that underlie the imposition of restitution obligations is
misplaced. Unlike § 523(a)(7), which explicitly ties its
application to the purpose of the
Page 495 U. S. 553
compensation, § 104(4)(A) makes no reference to the objectives
the State seeks to serve in imposing an obligation. That the
probation department's enforcement mechanism is criminal rather
than civil also does not alter the restitution order's character as
a "right of payment" and, indeed, may make the right greater than
that conferred by an ordinary civil obligation, since it is secured
by the debtor's freedom, rather than his property. Pp.
495 U. S.
557-560.
(b) Other Code provisions do not reflect a congressional intent
to exempt restitution orders from Chapter 13 discharge. Section
362(b)(1), which removes criminal prosecutions of the debtor from
the operation of the Code's automatic stay provision, is not
inconsistent with granting him sanctuary from restitution orders
under Chapter 13. Congress could well have concluded that
maintaining criminal prosecutions during bankruptcy proceedings is
essential to the functioning of government, but that a debtor's
interest in full and complete release of his obligations outweighs
society's interest in collecting or enforcing a restitution
obligation outside the agreement reached in a Chapter 13 plan. Nor
must § 726(a)(4) -- which in effect establishes the order for
settlement of claims under such plans, assigning a low priority to
a claim "for any fine, penalty, or forfeiture" -- be construed to
apply only to
civil fines, and not to
criminal
restitution orders in order to assure that governments do not
receive disfavored treatment relative to other creditors. That
construction conflicts with
Kelly's holding that the
quoted phrase, when used in § 523(a)(7), applies to criminal
restitution obligations. It also highlights the tension between
Kelly's interpretation of § 523(a)(7) and its dictum
suggesting that restitution obligations are not "debts." If
Congress believed that such obligations were not "debts" giving
rise to "claims," it would have had no reason to except the
obligations from discharge, and § 523(a)(7) would be mere
surplusage. Moreover,
Kelly is faithful to the language
and structure of the Code: Congress defined "debt" broadly, and
carefully excepted particular debts from discharge where policy
considerations so warranted. In thus securing a broader discharge
of debtors under Chapter 13 than Chapter 7, Congress chose not to
extend § 523(a)(7)'s exception to Chapter 13. Thus, it would
override the balance Congress struck in crafting the appropriate
discharge exceptions to construe "debt" narrowly in this context.
Pp.
495 U. S.
560-563.
(c) This holding does not signal a retreat from the principles
applied in
Kelly. The Code will not be read to erode past
bankruptcy practice absent a clear indication that Congress
intended such a departure. However, where, as here, congressional
intent is clear, the Court's function is to enforce the statute
according to its terms, even where this means
Page 495 U. S. 554
concluding that Congress intended to interfere with States'
administration of their criminal justice systems. Pp.
495 U. S.
563-564.
Page 495 U. S. 555
871 F.2d 421 (CA3 1989), affirmed.
MARSHALL, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and BRENNAN, WHITE, STEVENS, SCALIA, and KENNEDY,
JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which
O'CONNOR, J., joined,
post, p.
495 U. S.
564.
Justice MARSHALL delivered the opinion of the Court.
In
Kelly v. Robinson, 479 U. S. 36,
479 U. S. 50
(1986), this Court held that restitution obligations imposed as
conditions of probation in state criminal actions are
nondischargeable in proceedings under Chapter 7 of the Bankruptcy
Code, 11 U.S.C. § 701
et seq. The Court rested its holding
on its interpretation of the Code provision that protects from
discharge any debt that is "a fine, penalty, or forfeiture payable
to and for the benefit of a governmental unit, and is not
compensation for actual pecuniary loss." § 523(a)(7). Because the
Court determined that restitution orders fall within § 523(a)(7)'s
exception to discharge, it declined to reach the question whether
restitution orders are "debts" as defined by § 101(11) of the Code.
In this case, we must decide whether restitution obligations are
dischargeable debts in proceedings under Chapter 13, § 1301
et
seq. The exception to discharge relied on in
Kelly
does not extend to Chapter 13. We conclude, based on the language
and structure of the Code, that restitution obligations are "debts"
as defined by § 101(11). We therefore hold that such payments are
dischargeable under Chapter 13.
I
In September 1986, respondents Edward and Debora Davenport
pleaded guilty in a Pennsylvania court to welfare
Page 495 U. S. 556
fraud, and were sentenced to one year's probation. As a
condition of probation, the state court ordered the Davenports to
make monthly restitution payments to the county probation
department, which in turn would forward the payments to the
Pennsylvania Department of Public Welfare, the victim of the
Davenports' fraud. Pennsylvania law mandates restitution of welfare
payments obtained through fraud, Pa.Stat.Ann., Tit. 62, § 481(c)
(Purdon Supp.1989), and directs the probation section to "forward
to the victim the property or payments made pursuant to the
restitution order," 18 Pa.Cons.Stat. § 1106(e) (1988).
In May, 1987, the Davenports filed a petition under Chapter 13
in the United States Bankruptcy Court for the Eastern District of
Pennsylvania. In their Chapter 13 statement, they listed their
restitution obligation as an unsecured debt payable to the
Department of Public Welfare. Soon thereafter, the Adult Probation
and Parole Department of Bucks County (Probation Department)
commenced a probation violation proceeding, alleging that the
Davenports had failed to comply with the restitution order. The
Davenports informed the Probation Department of the pending
bankruptcy proceedings and requested that the Department withdraw
the probation violation charges until the bankruptcy issues were
settled. The Probation Department refused, and the Davenports filed
an adversary action in Bankruptcy Court seeking both a declaration
that the restitution obligation was a dischargeable debt and an
injunction preventing the Probation Department from undertaking any
further efforts to collect on the obligation.
While the adversary action was pending, the Bankruptcy Court
confirmed the Davenports' Chapter 13 plan without objection from
any creditor. [
Footnote 1]
Although notified of the
Page 495 U. S. 557
proceedings, neither the Probation Department nor the Department
of Public Welfare filed a proof of claim in the bankruptcy action.
Meanwhile, the Probation Department proceeded in state court on its
motion to revoke probation. Although the court declined to revoke
the Davenports' probation and extended their payment period, it
nonetheless ruled that its restitution order remained in
effect.
The Bankruptcy Court subsequently held that the Davenports'
restitution obligation was an unsecured debt dischargeable under 11
U.S.C. § 1328(a). 83 B.R. 309 (ED Pa. 1988). On appeal, the
District Court reversed, holding that state-imposed criminal
restitution obligations cannot be discharged in a Chapter 13
bankruptcy.
89 B.R. 428
(ED Pa.1988). The District Court emphasized the federalism concerns
that are implicated when federal courts intrude on state criminal
processes,
id. at 430, and relied substantially on dicta
in
Kelly, supra, 479 U.S. at
479 U. S. 50,
where the Court expressed "serious doubts whether Congress intended
to make criminal penalties
debts'" under the Code, 479 U.S. at
479 U. S. 50.
The Court of Appeals for the Third Circuit reversed, concluding
that "the plain language of the chapter" demonstrated that
restitution orders are debts within the meaning of the Code, and
hence dischargeable in proceedings under Chapter 13. In re
Johnson-AIlen, 871 F.2d 421, 428 (1989).
To address a conflict among bankruptcy courts on this issue,
[
Footnote 2] we granted
certiorari, 493 U.S. 808 (1989).
II
Our construction of the term "debt" is guided by the fundamental
canon that statutory interpretation begins with the
Page 495 U. S. 558
language of the statute itself.
Landreth Timber Co. v.
Landreth, 471 U. S. 681,
471 U. S. 685
(1985). Section 101(11) of the Bankruptcy Code defines "debt" as a
"liability on a claim." This definition reveals Congress' intent
that the meanings of "debt" and "claim" be coextensive.
See
also H.R. Rep. No. 95-595, p. 310 (1977); S.Rep. No. 95-989,
p. 23 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787. Thus,
the meaning of "claim" is crucial to our analysis. A "claim" is
a
"
right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured."
11 U.S.C. § 101(4)(A) (emphasis added). As is apparent, Congress
chose expansive language in both definitions relevant to this case.
For example, to the extent the phrase "right to payment" is
modified in the statute, the modifying language ("whether or not
such right is . . . ") reflects Congress' broad, rather than
restrictive, view of the class of obligations that qualify as a
"claim" giving rise to a "debt."
See also H.R.Rep. No.
95-595,
supra, at 309, U.S.Code Cong. & Admin.News
1978, p. 6266 (describing definition of "claim" as "broadest
possible" and noting that Code "contemplates that all legal
obligations of the debtor . . . will be able to be dealt with in
the bankruptcy case");
accord, S.Rep. No. 95-989,
supra, at 22, U.S.Code Cong. & Admin.News 1978, p.
5808.
Petitioners maintain that a restitution order is not a "right to
payment," because neither the Probation Department nor the victim
stands in a traditional creditor-debtor relationship with the
criminal offender. In support of this position, petitioners refer
to
Kelly's discussion of the special purposes of
punishment and rehabilitation underlying the imposition of
restitution obligations. 479 U.S. at
479 U. S. 52.
Petitioners also emphasize that restitution orders are enforced
differently from other obligations that are considered "rights to
payment."
In
Kelly, the Court decided that restitution orders
fall within 11 U.S.C. § 523(a)(7)'s exception to discharge
provision, which protects from discharge any debt
"to the extent
Page 495 U. S. 559
such debt is for a fine, penalty, or forfeiture payable to and
for the benefit of a governmental unit, and is not compensation for
actual pecuniary loss."
In reaching that conclusion, the Court necessarily found that
such orders are "not compensation for actual pecuniary loss."
Rather, "[b]ecause criminal proceedings focus on the State's
interests in rehabilitation and punishment," the Court held that
"restitution orders imposed in such proceedings operate
for the
benefit of' the State" and not "`for . . . compensation' of the
victim." 479 U.S. at 479 U. S.
53.
Contrary to petitioners' argument, however, the Court's prior
characterization of the purposes underlying restitution orders does
not bear on our construction of the phrase "right to payment" in §
101(4)(A). The Court in
Kelly analyzed the purposes of
restitution in construing the qualifying clauses of § 523(a)(7),
which explicitly tie the application of that provision to the
purpose of the compensation required. But the language employed to
define "claim" in § 101(4)(A) makes no reference to purpose. The
plain meaning of a "right to payment" is nothing more nor less than
an enforceable obligation, regardless of the objectives the State
seeks to serve in imposing the obligation.
Nor does the State's method of enforcing restitution obligations
suggest that such obligations are not "claims." Although neither
the Probation Department nor the victim can enforce restitution
obligations in civil proceedings,
Commonwealth v. Mourar,
349 Pa.Super. 583, 603,
504
A.2d 197, 208 (1986),
rev'd on other grounds, 517 Pa.
83,
534 A.2d
1050 (1987), the obligation is enforceable by the substantial
threat of revocation of probation and incarceration. That the
Probation Department's enforcement mechanism is criminal rather
than civil does not alter the restitution order's character as a
"right of payment." Indeed, the right created by such an order made
as a condition of probation is in some sense greater than the right
conferred by an ordinary civil obligation, because it is secured by
the debtor's freedom,
Page 495 U. S. 560
rather than his property. Accordingly, we do not regard the
purpose or enforcement mechanism of restitution orders as placing
such orders outside the scope of § 101(4)(A).
III
Moving beyond the language of § 101, the United States,
appearing as
amicus in support of petitioners, contends
that other provisions in the Code, particularly the exemption to
the automatic stay provision, § 362(b)(1), and Chapter 7's
distribution of claims provision, § 726, reflect Congress' intent
to exempt restitution orders from discharge under Chapter 13. We
are not persuaded, however, that the language or the structure of
the Code as a whole supports that conclusion.
Section 362(a) automatically stays a wide array of collection
and enforcement proceedings against the debtor and his property.
[
Footnote 3] Section 362(b)(1)
exempts from the stay "the commencement or continuation of a
criminal action or proceeding against the debtor." According to the
Senate Report, the exception from the automatic stay ensures that
"[t]he bankruptcy laws are not a haven for criminal offenders."
S.Rep. No. 95-989,
supra, at 51, U.S.Code Cong. &
Admin.News 1978, p. 5837. Section 362(b)(1) does not, however,
explicitly exempt governmental efforts to collect restitution
obligations from a debtor.
Cf. 11 U.S.C. § 362(b)(2)
("collection of alimony, maintenance, or support" is not barred by
the stay). Nonetheless, the United States argues that it would be
anomalous to construe the Code as eliminating a haven for criminal
offenders under the automatic stay provision while granting them
sanctuary from restitution obligations under Chapter 13.
We find no inconsistency in these provisions. Section 362(b)(1)
ensures that the automatic stay provision is not construed to bar
federal or state prosecution of alleged criminal
Page 495 U. S. 561
offenses. It is not an irrational or inconsistent policy choice
to permit prosecution of criminal offenses during the pendency of a
bankruptcy action and, at the same time, to preclude probation
officials from enforcing restitution orders while a debtor seeks
relief under Chapter 13. Congress could well have concluded that
maintaining criminal prosecutions during bankruptcy proceedings is
essential to the functioning of government but that, in the context
of Chapter 13, a debtor's interest in full and complete release of
his obligations outweighs society's interest in collecting or
enforcing a restitution obligation outside the agreement reached in
the Chapter 13 plan.
The United States' reliance on § 726 is likewise unavailing.
That section establishes the order in which claims are settled
under Chapter 7. Section 726(a)(4) assigns a low priority to
"any allowed claim, whether secured or unsecured, for any fine,
penalty, or forfeiture . . . to the extent that such fine, penalty,
forfeiture, or damages are not compensation for actual pecuniary
loss suffered by the holder of such claim."
The United States argues that the phrase "fine, penalty, or
forfeiture" should be construed to apply only to
civil
fines, penalties, and forfeitures, and not to
criminal
restitution obligations. Otherwise, State and Federal Governments
will receive disfavored treatment relative to other creditors both
in Chapter 7 and Chapter 13 proceedings,
see § 1325(a)(4)
(a Chapter 13 plan must ensure that unsecured creditors receive no
worse treatment than they would under Chapter 7), a result the
United States regards as anomalous, given the strength of the
governmental interest in collecting restitution payments.
The central difficulty with the United States' construction of §
726(a)(4) is that it conflicts with
Kelly's holding that §
523(a)(7), the exception to discharge provision, applies to
criminal restitution obligations. 479 U.S. at
479 U. S. 51 (§
523(a)(7) "creates a broad exception for all penal sanctions"). The
United States acknowledges that the phrase "fine, penalty,
Page 495 U. S. 562
or forfeiture," as it appears in § 726(a)(4), must have the same
meaning as in § 523(a)(7). We are unwilling to revisit
Kelly's determination that § 523(a)(7) "protects
traditional
criminal fines [by] codif[ying] the judicially
created exception to discharge for fines."
Ibid. (emphasis
added). Thus, we reject the view that §§ 523(a)(7) and 726(a)(4)
implicitly refer only to
civil fines and penalties.
[
Footnote 4]
The United States' position here highlights the tension between
Kelly's interpretation of § 523(a)(7) and its dictum
suggesting that restitution obligations are not "debts."
See
supra at
495 U. S. 557.
As stated above,
Kelly found explicitly that § 523(a)(7)
"codifies the judicially created exception to discharge" for both
civil and criminal fines. 479 U.S. at
479 U. S. 51.
Had Congress believed that restitution obligations were not "debts"
giving rise to "claims," it would have had no reason to except such
obligations from discharge in § 523(a)(7). Given
Kelly's
interpretation of § 523(a)(7), then, it would be anomalous to
construe "debt" narrowly so as to exclude criminal restitution
orders. Such a narrow construction of "debt" necessarily renders §
523(a)(7)'s codification of the judicial exception for criminal
restitution orders mere surplusage. Our cases express a deep
reluctance to interpret a statutory provision so as to render
superfluous other provisions in the same enactment.
See, e.g.,
Mackey v. Lanier Collection Agency & Service, Inc.,
486 U. S. 825,
486 U. S. 837
(1988).
Moreover, in locating Congress' policy choice regarding the
dischargeability of restitution orders in § 523(a)(7),
Kelly is faithful to the language and structure of the
Code: Congress defined "debt" broadly, and took care to except
particular debts from discharge where policy considerations so
warranted.
Page 495 U. S. 563
Accordingly, Congress secured a broader discharge for debtors
under Chapter 13 than Chapter 7 by extending to Chapter 13
proceedings some, but not all, of § 523(a)'s exceptions to
discharge.
See 5 Collier on Bankruptcy � 1328.01[1][c]
(15th ed. 1986) ("[T]he dischargeability of debts in chapter 13
that are not dischargeable in chapter 7 represents a policy
judgment that [it] is preferable for debtors to attempt to pay such
debts to the best of their abilities over three years rather than
for those debtors to have those debts hanging over their heads
indefinitely, perhaps for the rest of their lives") (footnote
omitted). Among those exceptions that Congress chose not to extend
to Chapter 13 proceedings is § 523(a)(7)'s exception for debts
arising from a "fine, penalty, or forfeiture." Thus, to construe
"debt" narrowly in this context would be to override the balance
Congress struck in crafting the appropriate discharge exceptions
for Chapter 7 and Chapter 13 debtors.
IV
Our refusal to carve out a broad judicial exception to discharge
for restitution orders does not signal a retreat from the
principles applied in
Kelly. We will not read the
Bankruptcy Code to erode past bankruptcy practice absent a clear
indication that Congress intended such a departure.
Kelly,
supra, 479 U.S. at
479 U. S. 47
(citing
Midlantic National Bank v. New Jersey Dept. of
Environmental Protection, 474 U. S. 494
(1986)). In
Kelly, the Court examined pre-Code practice
and identified a general reluctance "to interpret federal
bankruptcy statutes to remit state criminal judgments." 479 U.S. at
479 U. S. 44.
This pre-Code practice informed the Court's conclusion that §
523(a)(7) broadly applies to all penal sanctions, including
criminal fines. Here, on the other hand, the statutory language
plainly reveals Congress' intent not to except restitution orders
from discharge in certain Chapter 13 proceedings. This intent is
clear from Congress' decision to limit the exceptions to discharge
applicable to Chapter 13, § 1328(a), as
Page 495 U. S. 564
well as its adoption of the "broadest possible" definition of
"debt" in § 101(11).
See supra at
495 U. S.
558.
Nor do we conclude lightly that Congress intended to interfere
with States' administration of their criminal justice systems.
Younger v. Harris, 401 U. S. 37,
401 U.S. 46 (1971). As the
Court stated in
Kelly, permitting discharge of criminal
restitution obligations may hamper the flexibility of state
criminal judges in fashioning appropriate sentences and require
state prosecutors to participate in federal bankruptcy proceedings
to safeguard state interests. 479 U.S. at
479 U. S. 49.
Certainly the legitimate state interest in avoiding such intrusions
is not lessened simply because the offender files under Chapter 13,
rather than Chapter 7. Nonetheless, the concerns animating
Younger cannot justify rewriting the Code to avoid federal
intrusion. Where, as here, congressional intent is clear, our sole
function is to enforce the statute according to its terms.
Restitution obligations constitute debts within the meaning of §
101(11) of the Bankruptcy Code, and are therefore dischargeable
under Chapter 13. The decision of the Court of Appeals is
affirmed.
It is so ordered.
[
Footnote 1]
The Davenports subsequently fulfilled their obligations under
the plan and received a discharge pursuant to 11 U.S.C. § 1328(a),
which provides:
"As soon as practicable after completion by the debtor of all
payments under the plan, unless the court approves a written waiver
of discharge executed by the debtor after the order for relief
under this chapter, the court shall grant the debtor a discharge of
all debts provided for by the plan or disallowed under section 502
of this title."
The section contains two exceptions that the parties agree are
not applicable to this case.
[
Footnote 2]
Compare, e.g., In re Kohr, 82 B.R. 706,
712 (MD
Pa.1988) (restitution obligations are not "debts" within the
meaning of the Code),
with In re Cullens, 77 B.R. 825, 828
(Colo.1987) (restitution orders are "debts").
[
Footnote 3]
Although the automatic stay protects a debtor from various
collection efforts over a specified period, it does not extinguish
or discharge any debt.
See generally 1 W. Norton,
Bankruptcy Law and Practice §§ 20.04-20.36 (1986 and
Supp.1989).
[
Footnote 4]
In any event, the Government's contention that Congress must
have intended to favor criminal, as opposed to civil, claims held
by the government is unsubstantiated. The United States' view about
the wisdom of this policy choice, unsupported by any textual
authority that Congress in fact adopted such a policy, is an
inadequate basis for rejecting the statute's broad definition of
"debt."
See supra at
495 U. S.
557-558.
Justice BLACKMUN, with whom Justice O'CONNOR joins,
dissenting.
The Court today concludes that Congress intended an obligation
to pay restitution imposed as part of a state criminal sentence to
be a "debt" within the meaning of the United States Bankruptcy
Code. Because Congress has given no clear indication that it
intended to abrogate the long "history of bankruptcy court
deference to criminal judgments,"
Kelly v. Robinson,
479 U. S. 36,
479 U. S. 44
(1986), and because there is no suggestion in the Bankruptcy Code
that it may be used as a shield to protect a criminal from
punishment for his crime, I must disagree.
Page 495 U. S. 565
This Court carefully has set forth a method for statutory
analysis of the Bankruptcy Code.
See Kelly, supra; see also
Midlantic National Bank v. New Jersey Dept. of Environmental
Protection, 474 U. S. 494
(1986). When analyzing a bankruptcy statute, the Court, of course,
looks to its plain language. But the Court has warned against an
overly literal interpretation of the Bankruptcy Code.
"'[W]e must not be guided by a single sentence or member of a
sentence, but look to the provisions of the whole law, and to its
object and policy.'"
Kelly, 479 U.S. at
479 U. S. 43,
quoting, as have other opinions of this Court,
United
States v. Heirs of Boisdore, 8 How. 113,
49 U. S. 122
(1849). The strict language of the Bankruptcy Code does not
control, even if the statutory language has a "plain" meaning, if
the application of that language "will produce a result
demonstrably at odds with the intention of its drafters."
United States v. Ron Pair Enterprises, Inc., 489 U.
S. 235,
489 U. S. 243
(1989). To determine the drafters' intent, the Court presumes that
Congress intended to keep continuity between pre-Code judicial
practice and the enactment of the Bankruptcy Code in 1978.
Midlantic, 474 U.S. at
474 U. S. 501.
For me, the statutory language, the consistent authority treating
criminal sanctions as nondischargeable under the Bankruptcy Act of
1898, the absence of any legislative history suggesting that the
Code was intended to change that established principle, and the
strong policy of deference to state criminal judgments all compel
the conclusion that a restitution order is not a dischargeable
debt.
The majority appropriately begins its analysis with the language
of the statute. As the majority points out, the Bankruptcy Code
defines "debt" as a "liability on a claim." 11 U.S.C. § 101(11).
The term "claim," in turn, is defined as a "right to payment." §
101(4)(A). The question then becomes whether it is clear from the
statutory language alone that a restitution order is a "right to
payment," or whether the statutory language, "at least to
some
degree, [is] open to interpretation."
Ron Pair, 489
U.S. at
489 U. S.
245-246 (emphasis
Page 495 U. S. 566
added). The majority simply asserts that the plain meaning of
"right to payment" is an "enforceable obligation," which gives a
restitution order the "character" of a "right to payment."
Ante at
495 U. S. 559.
I cannot accept this easy conclusion.
Some time ago, Justice Frankfurter pointed out: "The notion
that, because the words of a statute are plain, its meaning is also
plain is merely pernicious oversimplification."
United States
v. Monia, 317 U. S. 424,
317 U. S. 431
(1943) (dissenting opinion). This observation rings especially true
in this case. It is not at all clear to me that the words "right to
payment" plainly include an obligation resulting from a criminal
restitution order. While the words may be of common usage, their
meaning is not at all plain in this context. Notably absent from
the Code's definition (and from the legislative history) of both
"debt" and "claim" is any indication that Congress intended the
discharge provisions to extend into the criminal sphere. Indeed,
there are persuasive reasons for excluding criminal restitution
from the category of "debts." Petitioners argue -- not without
force -- that a criminal restitution order is not a "right to
payment" because neither the victim of the crime nor the Probation
Department possesses a right to payment of a restitution order.
Brief for Petitioners 22. Petitioners also argue that, because the
victim has no right of enforcement, the victim has no right to
payment.
Id. at 27;
see also Commonwealth v.
Mourar, 349 Pa.Super.Ct. 583, 603,
504
A.2d 197, 208 (1986),
vacated and remanded on other
grounds, 517 Pa. 83,
534 A.2d
1050 (1987) (if criminal defendant fails to make restitution as
ordered, victim has no right of enforcement);
cf. Bearden v.
Georgia, 461 U. S. 660
(1983) (state court cannot constitutionally revoke probation for
failure to pay a fine and make restitution without first
determining the probationer's ability to pay). Several bankruptcy
courts have agreed with petitioners, and have decided that the
definition of debt in the Bankruptcy Code does not include a
criminal restitution order.
See, e.g., In re Norman, 95
B.R. 771, 773, and n. 3 (Colo. 1989) (criminal penalties
Page 495 U. S. 567
and fines are not "debts" as defined under § 101(11) of the
Code; because crime victim has no "right to payment," restitution
is not a "debt");
In re Pellegrino, 42 B.R. 129, 132
(Conn. 1984) (since "crime victim has no
right to payment,'
restitution is not a `debt' under Bankruptcy Code § 101(11)");
In re Magnifico, 21 B.R. 800 (Ariz.1982) (criminal
restitution not a "debt" contemplated by Bankruptcy Code); In
re Button, 8 B.R. 692, 694 (WD NY 1981) ("from these
definitions [of `debt,' `claim,' and `creditor'], it does not
appear that restitution could be considered a debt"); accord,
In re Kohr, 82 B.R. 706, 712 (MD
Pa.1988); In re Oslager, 46 B.R. 58 (MD Pa.1985); In
re Mead, 41 B.R. 838 (Conn.1984). Other bankruptcy courts, to
be sure, have determined that the definition of debt does include
restitution obligations. See e.g., In re Vandrovec, 61
B.R. 191 (N.D.1986). At the least, these varied interpretations of
the Code by bankruptcy judges are evidence that the phrase "right
to payment," when applied to restitution orders, is "subject to
interpretation." Kelly, 479 U.S. at 479 U. S. 50.
The statute, on its face, is not self-defining, and surely does not
compel the result that criminal restitution orders constitute
"debts."
My conclusion that the majority errs in concluding that the
words "right to payment" include restitution orders is supported by
the fact that such an interpretation would "
produce a result
demonstrably at odds with the intention of its drafters.'" Ron
Pair, 489 U.S. at 489 U. S. 243,
quoting Griffin v. Oceanic Contractors Inc., 458 U.
S. 564, 458 U. S. 571
(1982). This Court has declared that, to effectuate Congress'
intent in enacting the Code, we must consider the language of §
101
"in light of the history of bankruptcy court deference to
criminal judgments and in light of the interests of the States in
unfettered administration of their criminal justice systems."
Kelly, 479 U.S. at
479 U. S. 44.
That deference was reflected in the judicial interpretation of the
discharge provisions of the Bankruptcy Act of 1898. In
Kelly, the Court discussed at length the customary
pre-Code practice of
Page 495 U. S. 568
holding that criminal monetary sanctions were not dischargeable
in bankruptcy.
See id. at 44-45. The Court explained that
the new Code was enacted in 1978 to replace the 1898 Act and noted:
"The treatment of criminal judgments under the Act of 1898 informs
our understanding of the language of the Code."
Id. at
44.
Because Congress' presumed intent is to preserve pre-Code
practice unless it specifically indicates otherwise, we must first
consider the treatment of criminal restitution orders under the
1898 Act. That Act established two categories of debts, those that
were "allowable" and those that were "provable." "Only if a debt
was allowable could the creditor receive a share of the bankrupt's
assets."
Id. at 44, citing § 65(a). Only provable debts
were dischargeable.
See § 17. The Court in
Kelly
explained that penalties or forfeitures owed to governmental
entities generally were not allowable, § 57(j); but the Act failed
to state that such debts were not provable.
See § 63.
Given this statutory scheme,
"[t]he most natural construction of the Act, therefore, would
have allowed criminal penalties to be discharged in bankruptcy,
even though the government was not entitled to a share of the
bankrupt's estate."
479 U.S. at
479 U. S. 44-45.
Nonetheless, courts consistently "refused to allow a discharge in
bankruptcy to affect the judgment of a state criminal court."
Id. at
479 U. S. 45.
See, e.g., In re Abramson, 210 F. 878, 880 (CA2 1914)
("judgments for penalties are not debts which can be proved or
allowed as such because they are not for a fixed liability");
cf. In re Alderson, 98 F. 588 (W.Va. 1899) (the only
federal court decision found by the
Kelly Court that
allowed a discharge to affect a sentence imposed by a state
criminal court). In fact, the judicially created exception to
discharge was
"so widely accepted by the time Congress enacted the new Code
that a leading commentator could state flatly that 'fines and
penalties are not affected by a discharge.'"
Kelly, 479 U.S. at
479 U. S. 46,
quoting 1A Collier on Bankruptcy � 17.13, pp. 1609-1610, and n. 10
(14th ed. 1978).
Page 495 U. S. 569
Those courts addressing criminal restitution orders "applied the
same reasoning to prevent a discharge in bankruptcy from affecting
such a condition of a criminal sentence." 479 U.S. at
479 U. S. 46. As
a result, when Congress enacted the Bankruptcy Code in 1978, there
existed an "established judicial exception to discharge for
criminal sentences, including restitution orders."
Ibid.
See also Zwick v. Freeman, 373 F.2d 110, 116 (CA2 1967)
("governmental sanctions are not regarded as debts even when they
require monetary payments"). Because criminal sanctions were not
dischargeable, they were also not "provable," as the two terms
tended to merge in pre-Code practice.
See Collier at �
17.05, p. 1587 (pre-Code practice held that "[f]ines for violation
of law, and forfeitures, are not provable [for purposes of § 63],
and, therefore, not dischargeable" (footnotes omitted)).
Thus, under the 1898 Act, criminal monetary sanctions were not
allowable, provable, or dischargeable in bankruptcy. In functional
terms, criminal monetary sanctions were not "debts" for the purpose
of pre-Code bankruptcy proceedings. This judicially created
pre-Code practice "reflected policy considerations of great
longevity and importance," that is, "
a deep conviction that
federal bankruptcy courts should not invalidate the results of
state criminal proceedings.'" Ron Pair, 489 U.S. at
489 U. S. 245,
quoting Kelly, 479 U.S. at 479 U. S.
47.
In the face of such a longstanding principle,
"a court must determine whether Congress has expressed an intent
to change the interpretation of a judicially created concept in
enacting the Code."
Ibid. The Court stated in
Midlantic:
"The normal rule of statutory construction is that, if Congress
intends for legislation to change the interpretation of a
judicially created concept, it makes that intent specific."
474 U.S. at
474 U. S. 501.
There is no indication that Congress had any intent so drastically
to change the established pre-Code practice regarding criminal
sanctions. Although the Bankruptcy
Page 495 U. S. 570
Code definition of "debt" is a broad one,
"nothing in the legislative history [of the Bankruptcy Code
provisions] compels the conclusion that Congress intended to change
the state of the law with respect to criminal judgments."
Kelly, 479 U.S. at
479 U. S. 50, n.
12;
see also Midlantic (despite Code language that the
dissent labeled "absolute in its terms," 474 U.S. at
474 U. S. 509,
the Court refused to find that Congress had implicitly abrogated a
judicially created pre-Code limitation on abandonment powers).
Indeed, "[i]n light of the established state of the law -- that
bankruptcy courts could not discharge criminal judgments," the
Kelly Court expressed "serious doubts whether Congress
intended to make criminal penalties
debts' within the meaning
of § 101(4)." 479 U.S. at 479 U. S. 50. If
Congress had intended such a radical change, surely it would have
spoken more clearly. In my view, Congress' attitude towards
criminal sanctions is most clearly indicated in the statement that
"[t]he bankruptcy laws are not a haven for criminal offenders."
H.R. Rep. No. 95-595, p. 342 (1978), U.S.Code Cong. &
Admin.News 1978, p. 6299 (discussing automatic stay
provisions).
The majority today brushes aside the rule of statutory
construction outlined by this Court -- a rule the Court has
stressed must be used with "
particular care in construing
the scope of bankruptcy codifications."
Midlantic, 474
U.S. at
474 U. S. 501
(emphasis added). The majority insists that its holding does not
signal a retreat from the principles applied in
Kelly
because there is a "
clear indication" that Congress
intended to depart from past bankruptcy practice.
Ante at
495 U. S. 563
(emphasis added). The majority contends that Congress made that
intent "clear" by its "adoption of the
broadest possible'
definition of `debt.'" Ante at 495 U. S. 564.
I disagree. And I am puzzled by the majority's position, because
the Court previously has rejected it expressly. See Kelly,
479 U.S. at 479 U. S. 50, n.
12 (although the definition of debt was broadened, "nothing in the
legislative history of these sections compels the conclusion that
Congress intended to change the state of the law with respect to
criminal judgments"). Moreover, it seems
Page 495 U. S. 571
more likely that the broader definition was enacted simply to
redress the problems created by the restrictive definitions of
"allowable" and "provable" claims under the Act that made it
impossible for some debtors to resolve all their civil liabilities
in bankruptcy. Of particular concern were contingent and
unliquidated claims that were "nonprovable" under the Act:
"[U]nder the liquidation chapters of the Bankruptcy Act, certain
creditors are not permitted to share in the estate because of the
nonprovable nature of their claims, and the debtor is not
discharged from those claims. Thus, relief for the debtor is
incomplete, and those creditors are not given an opportunity to
collect in the case on their claims. The proposed law will permit
complete settlement of the affairs of a bankrupt debtor, and a
complete discharge and a fresh start."
H.R.Rep. No. 95-595, p. 180 (1978), U.S. Code Cong. &
Admin.News 1978, p. 6141. The statutory language itself highlights
this approach. The Code's definition of "claim" includes any right
to payment that is "unliquidated," "contingent," "unmatured," or
"disputed," 11 U.S.C. § 101(4)(A), but does not include any
modifier that in any way suggests the incorporation of criminal
sanctions.
The majority's assertion that Congress' enactment of § 523(a)(7)
evidences a "clear indication" to abrogate pre-Code rulings that
criminal sanctions were neither provable nor dischargeable in
bankruptcy is similarly unconvincing. Under § 523(a)(7), a debt is
not dischargeable
"to the extent such debt is for a fine, penalty, or forfeiture
payable to and for the benefit of a governmental unit, and is not
compensation for actual pecuniary loss, other than a tax
penalty."
§ 523(a)(7). The majority reasons that if restitution
obligations were not debts, there would be no need to except them
from discharge; therefore, it says, Congress clearly intended that
criminal restitution orders be considered debts. Because §
523(a)(7) does not apply to all Chapter 13 proceedings, the
majority contends that criminal restitution obligations should be
considered
Page 495 U. S. 572
dischargeable debts under Chapter 13.
Ante at
495 U. S.
562-563. Again, I disagree. The enactment of this single
provision of the Bankruptcy Code does little to demonstrate clear
congressional intent to change traditional pre-Code practice. Even
if § 523(a)(7) can be interpreted as making criminal restitution
orders not dischargeable, this does not mean that Congress intended
to make criminal restitution orders debts. Under pre-Code practice,
nondischargeability of a criminal restitution order would be
evidence that it was not a debt at all. Congress gave no indication
that it intended to break with this pre-Code conception of
dischargeability when it enacted § 523(a)(7).
In addition, pre-Code Chapter XIII essentially adopted Chapter
VII discharge policy, excepting from discharge all debts that were
not dischargeable under Chapter VII when those debts were held by
creditors who had not accepted the bankruptcy plan.
See §
60 of the Act. Congress' failure to include a parallel provision to
§ 523(a)(7) in Chapter 13, far from demonstrating a clear intent to
make fines dischargeable in Chapter 13, is more likely a carryover
from pre-Code practice, where Chapter XIII relied on Chapter VII's
discharge provisions. "If Congress had intended, by § 523(a)(7) or
by any other provision," to change the pre-Code practice of holding
monetary sanctions not allowable, provable, or dischargeable in
bankruptcy,
"'we can be certain that there would have been hearings,
testimony, and debate concerning consequences so wasteful, so
inimical to purposes previously deemed important, and so likely to
arouse public outrage.'"
Kelly, 479 U.S. at
479 U. S. 51,
quoting Powell, J., dissenting in
TVA v. Hill,
437 U. S. 153,
437 U. S. 209
(1978).
I do not believe that Congress so cavalierly would have
disregarded the States' overwhelmingly important interest in
administering their criminal justice systems free from the
interference of a federal bankruptcy judge. Every State and the
District of Columbia presently authorizes the use of restitution
orders.
See Note, Criminal Restitution as a Limited
Page 495 U. S. 573
Opportunity, 13 New Eng.J. on Crim. & Civ. \Confinement
243-244, n. 9 (1987). A bankruptcy court discharge of a criminal
restitution order is a deep intrusion by the federal courts into
the State's sovereign power. It vacates a criminal sentence that
has presumably been entered in full accord with all substantive and
procedural mandates of the Constitution. I seriously doubt that
"Congress lightly would limit the rehabilitative and deterrent
options available to state criminal judges."
Kelly, 479
U.S. at
479 U. S.
49.
The majority's decision today will have an adverse effect on the
sentencing process. The judgment of sentencing courts and
legislators that rehabilitation is the most effective form of
punishment will be tempered by the knowledge that convicted
criminals easily may avoid a sentence requiring restitution merely
by obtaining a Chapter 13 discharge. Sentencing courts will be
faced with a dilemma. The sentencing judge must either risk that a
federal bankruptcy judge will undermine a restitution order, thus
absolving the convicted criminal from punishment, or impose a
harsher and less appropriate term of imprisonment, a sentence that
the federal bankruptcy court will be unable to undermine. Congress
surely would not have enacted legislation with such an
extraordinary result without at least some discussion of its
consequences.
The majority's holding turns
Kelly around. The
Kelly Court stressed this compelling federalism concern,
terming it "one of the most powerful of the considerations that
should influence a court considering equitable types of relief,"
and recognized that it "must influence our interpretation of the
Bankruptcy Code." 479 U.S. at
479 U. S. 49.
The Court was concerned that
"federal remissions of judgments imposed by state criminal
judges . . . would hamper the flexibility of state criminal judges
in choosing the combination of imprisonment, fines, and restitution
most likely to further the rehabilitative and deterrent goals of
state criminal justice systems."
Ibid. The concerns of the
Kelly Court are no
less applicable in this
Page 495 U. S. 574
case. Congress' intent to invalidate the results of state
criminal proceedings is far from clear. There is simply no
suggestion that Congress intended to depart from pre-Code practice
and encroach so deeply upon the States' administration of their
criminal justice systems. In the absence of evidence of
congressional intent to the contrary, the statutory construction
rule set forth in
Kelly and
Midlantic requires a
determination that the Bankruptcy Code does not permit convicted
criminals to discharge their restitution obligations in Chapter 13
proceedings. I would therefore refuse to allow the Bankruptcy Code
to become a sanctuary for a criminal trying to avoid the punishment
meted out by a state court judge.
I dissent.